CLO pipeline accelerates; KKR, Ares market CLOs; issuance to date 41% higher than 2013

By Cristal Cody

Tupelo, Miss., Nov. 24 – CLO primary market activity is expected to stay busy during the first half of the week and then quiet for the Thanksgiving Day holiday, according to market sources.

“It will probably be a race to the finish through December,” one market source said. “Some people are rebalancing their books at this time of year, and people will start shutting down that third week of December.”

Ares Management LLC joined the pipeline with a $511.23 million deal, while KKR Financial Advisors II, LLC plans to bring $415.6 million of CLO notes, according to market sources.

“CLO supply is ending November on a strong note as arrangers and managers clear the deck ahead of Thanksgiving,” J.P. Morgan Securities LLC analysts said in a market note.

Year-to-date global CLO issuance of $137.4 billion, including refinancings, has surpassed the $135 billion global deal record set in 2006, the analysts said.

CLO issuance to date is 41% higher than the $97.4 billion priced in fiscal year 2013, according to the note.

JPMorgan said that 2014 is the “only year with average monthly U.S. CLO issuance exceeding $10 [billion], with eight months seeing $10 [billion-plus] issuance versus four months in 2006.”

The CLO market received some buzz on Monday on news that the Loan Syndications and Trading Association has filed a lawsuit against the Federal Reserve and the Securities and Exchange Commission over the finalized CLO risk retention rules, sources said.

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